A blog on recent and topical developments in corporate transactions law by Jim Rench, corporate partner with Stark & Knoll in Akron, Ohio.

Friday, December 08, 2006

Paulson: Hedge Funds 'Positive' But Need to Be Monitored

In an exclusive interview on cnbc.com, Treasury Secretary Henry Paulson said hedge funds have had a positive impact on capital markets but need to be more closely monitored in an effort to protect investors."This is something we are giving a lot of thought and attention to," Paulson told CNBC's Maria Bartiromo. "There have been major changes in the capital markets over the past five to ten years, including big increases in private pools of capital."Paulson said they are examining hedge funds in three areas, including: investor protection; systemic risk, or ensuring that there is enough liquidity in the system; and transparency between the hedge funds and those lending them money.The Securities and Exchange Commission adopted a rule in 2004 ordering most hedge fund advisers to register with the investor protection agency. But a federal court threw out the rule in June.Since the SEC's registration rule was struck down, the agency has been developing scaled-back rule proposals, including one to raise the minimum net worth an investor must possess to be allowed to invest in hedge funds. That proposal is expected to come before the SEC for a vote next week.The average annualized performance of hedge funds 14.03%, according to the HFRI Fund Weighted Composite Index. The typical hedge fund charges investors a 2% management fee, along with a 20% share of profits.

No comments:

Contributors

Plaxo Badge

Jim Rench is a Partner in the law firm of Stark & Knoll Co., L.P.A., Akron, Ohio, where he is a member of the Corporate Practice Group.Mr. Rench received his undergraduate degree (B.S. in Business Administration - Accounting and Finance) from Miami University, Oxford, Ohio, and his law degree, (J.D., magna cum laude, Order of the Coif) from The Ohio State University, College of Law.Mr. Rench has enjoyed a Martindale-Hubbell rating of “av” for many years and has been recognized in Best Lawyers in America (Banking Law) since 1995 and in Ohio Super Lawyers (Business, General) since 2004 . He is a member of numerous Bar and professional associations, including the National Association of Corporate Directors and the Association for Corporate Growth.Mr. Rench has substantial experience representing clients in corporate and commercial matters, including entity formation and governance, securities and corporate finance, secured lending, and mergers and acquisitions.